Scotland shows the way
By Richard Harman (author)
A high-powered business lobby group yesterday proposed that the Government hand over the planning and development of infrastructure in New Zealand to an independent body.
And they are calling for a country-wide restructuring of water and wastewater system which would inevitably lead to calls for public-private partnerships or even complete privatisations.
Infrastructure NZ has based its recommendation on a recent study trip a number of its key members took to the United Kingdom and Scotland.
Membership of Infrastructure NZ is a who’s who of New Zealand business with accountants, banks, law firms, local bodies, and big construction companies like Fletchers and Fulton Hogan all belonging.
The report makes two recommendations which are likely to be controversial:
- Establish an independent body to identify long-term infrastructure needs and monitor performance against these needs. This will enhance public awareness of capital requirements, encourage a strategic approach to service delivery and mitigate underinvestment through the economic cycle.
- Reform the water sector. Consolidate water supply and wastewater services into a smaller number of large operators. This will enhance strategic capability, improve asset management and enable monitoring and benchmarking.
Whether the Government would be prepared to hand over the main infrastructure decisions to an independent body is questionable.
Infrastructure Minister Steven Joyce had apparently not seen the report last night, and his office offered no response to it.
Even more controversial would be the argument that the country’s mainly Council owned water and wastewater services be merged with the possibility of privatisation.
But the Council’s report draws on the same frustration that is evident across the Auckland business sector with the length of time it has taken to get the Government to move on core infrastructure in the city.
It offers as a case study the Central Rail Loop in the city.
“The City Rail Link (CRL) in Auckland sat inconspicuously on various council strategic documents, but generally invisible to the public, for many decades,” it says.
“Public transport is a regional activity, but the cost vastly exceeded the capacity of local government, so the project sat neither on local nor central government plans.
“It only emerged as a political priority through an election, effectively surprising the public, raising questions about its efficacy and increasing opposition.”
It says that the CRL became a major political issue, epitomised by the production of vastly different economic analyses.
Only on Wednesday Infrastructure Minister Steven Joyce was saying that the CRL did not stack upon a traditional cost-benefit analysis.
But the report says an independent agency could have reviewed the business case and objectively investigated evidence and options.
“An independent authority providing a long term needs assessment could have better anticipated the need for the CRL.
“ It could have held public agencies to account for either delivering on the project or meeting needs via an alternative.
“It could have objectively reviewed competing business cases and increased public confidence in decision making.”
On the water, the report says that apart from Auckland and Wellington, local councils manage urban water services.
In most cases, water is not metered, and charges are included in a property’s rates bill.
It cites the Scottish example where one body manages water across all of Scotland; costs are lower, and health scares have been addressed by superior management possible with a larger entity.
The report also traverses more familiar ground on funding infrastructure and planning.
But it’s importance will be that it will sit alongside the Productivity Commission’s recent report into planning, local government and transport as part of the platform from which the next Government (if it is National-led) will radically reshape the way that Council's plan cities and deliver the infrastructure with them.